FTSE 100 edges towards 2010 high

The FTSE 100 edged close to a year-long high today, as thin trading accentuated an early "Santa rally".

The market's closing high this year came on 5 November, when the blue-chip index reached 5,875 points. It closed today 47 points up at 5,860, having got to within 2 points of its earlier high at one stage.

Mining stocks were responsible for the surge, as strong Chinese economic data pushed copper, in particular, to an all-time high. Buoyant Chinese industrial production ensured copper surged to well over $9,000 a tonne.

Kazakhmys was the biggest gainer on the FTSE 100 as a result, up 63p or 4% to £15.92. Mining stocks and minerals specialists added 33 points to the index collectively.

But the trading was very thin, possibly accentuating any moves. In total the volumes on the FTSE 100 stood at just 551m for the day. That compares with 760m for last Monday. So had everyone gone home for Christmas already?

"There's an element of people winding down for Christmas, but it's a bit early. It was a really quiet day for news," said David Jones, chief market strategist at IG Index.

It is probably too early too to declare the arrival of a "Santa rally". There are various explanations for such a rally: that it is caused by fund managers closing out positions before the end of the year, or that it is in advance of expectations of January buying. Regardless, it is normally reserved for the week between Christmas and New Year.

The day's other big story was about mergers. The Wellstream and John Wood Group deals boosted the oil services sector, with sector peer and FTSE 100 stock Petrofac climbing 50p to £14.93 on the back of them.

Reckitt Benckiser's purchase of Indian group Paras Pharmaceuticals also helped its stock, which was up 64p to £35.73.

Chemicals maker Yule Catto, meanwhile, was the biggest gainer among all of the UK's top 350 stocks after it said it was buying German latex group PolymerLatex. It rose 11.5%, or by 30p, to finish at 290p.

Elsewhere, housebuilders were feeling the pinch amid renewed evidence of house price falls. Figures from Rightmove showed asking prices down by 3% in the last month. Redrow led the housebuilders down, falling 5.4% or by 7p to 128p.

One piece of corporate news that did come out was a guilty plea from Weir Group on its Iraqi oil-for-food kickback issues.

Contracts awarded to the group were inflated by £3.1m between 2000 and 2002, the sums then paid back via an agent of one of the Scottish engineer's subsidiaries.

Oil-for-food was a programme designed to allow Saddam Hussein's regime to get essential supplies despite trade sanctions against Iraq. Weir Group has agreed to repay almost £14m, the amount it gained from the offences. Despite the news the shares closed 15p up at £17.79.

The biggest faller among the FTSE 100 was Cobham. The defence specialist was the subject of bid talk last week, leading some to possibly take profits. Many will be bailing out too because the group is leaving the blue-chip index and will lose support from the tracker funds. It fell 3.6p to 205.9p.